Tale 1: Don’t rain on the parade

Capital costs associated with building a green hydrogen production facility are a significant contributor to the overall production price. The location of a project and the engineering design requirements for that location will impact capital costs and are therefore important.

It is interesting to look at the map of Australia above and the cyclone traces and consider which projects will need to spend more on capital to meet engineering design specifications for cyclone zones and because of reduced solar irradiation due to cloud cover (we will address grid connected projects in a later article).

Higher capital costs, as a general rule, also translate to higher operating costs in these situations. Higher capital and operating costs restrict the ability to reduce the production price.

Weather will be more extreme in the years ahead so capital and operating cost issues will become more acute. Designing for historical weather patterns is unlikely to be sufficient for the future particularly with long life projects.

The importance of historical and future weather patterns as climate events become more extreme is a critical consideration for project developers, owners and investors.

Offtakers sourcing hydrogen or hydrogen products from projects in locations of high cyclone traffic need to be aware of the cost implications for the project and therefore its ability to meet a competitive price point and potential disruption to supply.?